Saudi Arabia is the largest jewellery
manufacturer in the Middle East using annually about 140 tonnes (4.5 million oz)
of gold, much of it from recycled
gold, as ornaments are regularly traded in for new items. Manufacturing was
originally fragmented but has now consolidated around 10 to 15 larger companies
situated mostly in and around Jeddah, Riyadh and Damman, which these days focus
on better design and quality. Production is mainly in 21 carat,
with some 18 carat which is often studded with cubic zirconia.

Main Saudi buying seasons are at
Ramadan and the Haj(Credit: Timothy Green)

Some of the larger
manufacturers have stepped up efforts to export, mainly to other Gulf
countries, but volumes are still small and account for less than 10% of
overall production.

Pamp-made Saudi and Mecca pendants
(Credit: courtesy PAMP S.A.)

The local market now takes
about 150 tonnes (4.8 m oz). The bulk is still in 21 carat investment jewellery
although increasing volumes of international styles are available. Imported
jewellery accounts for around 15% of the market comprising 21 carat items
from Malaysia, Singapore and Bahrain and 18 carat from Italy.
These arrive mainly via Dubai.
Imported jewellery is subject to a 12% customs duty.

Home market demand is
very much influenced not only by the gold
price but also by the oil price which impacts directly on the prosperity
of the Saudi people. Main buying seasons are at the time of Ramadan and the
Haj, when pilgrims visit the Kingdom bound for the holy cities of Mecca and
Medinah.

There are 3,000-4,000
retail shops in Saudi Arabia selling mainly plain gold, traditional,
investment jewellery with low margins. However, in the shopping malls located
in the major cities one can see increasing displays of western-style
jewellery, with and without stones.